FashionindustriesRetail Trends

How fast fashion retailers gain business agility

2 min read

Once, fashion had two main seasons: spring/summer and autumn/winter. But fast-fashion retailers have revolutionized the fashion business by introducing lots of  “mini-seasons” designed to  pick up on new trends and make products available for customers in as little time as possible.

Fast-fashion designers create new looks every week and so the new designs must be manufactured and shipped to stores in a matter of weeks, not months. This agility enables fast fashion leaders like H&M and Zara to offer dozens of mini-seasons designed to encourage consumers to return to their stores more often to check out the latest styles.  The pace of introduction of new fashion items on websites can be even more rapid.

Boosting efficiency

These faster product life-cycles have largely been achieved by improving the efficiency of production and supply chain management, as well as well-coordinated multi-channel marketing.

Zara achieves four times more profitability than most apparel retailers by combining higher turnover and margins with lower inventory risk, according to a Forbes article.

Retailers must be driven not only by achieving speed and efficiency across the entire product cycle but also by what customers actually want, not just by inward-looking cost-savings in their supply chain.

If done correctly, fast fashion has proven to be a more profitable business model for retailers. To meet the demands for fresher and more frequent new products by today´s 24/7 fashionistas, however, it is critical for retailers to have a 360 degree picture of inventory across all channels.

Omnichannel for fast fashion success

New items generally get introduced with no historic data on sales or demand, which makes it difficult for retailers to accurately plan for allocation, assortment, pricing and replenishment of new products.  Retailers who are able to empty seasonal inventory quickly can avoid unnecessary markdowns and dead inventory.

Fast-fashion retailers tend to have significantly lower markdown problems,  both in the number of items marked down and in magnitude of markdown,  than other classes of retailers. Zara’s markdowns, for example, are typically around 15 percent, compared to 50 percent or more for traditional retailers.

Optimize inventory and assortments

The latest retail software offers real-time sales tracking to determine production during the selling season and provide optimal inventory and assortment balancing across all channels.

Retailers can forecast optimal pricing strategies for seasonal inventory, optimizing total profit to include the financial impact of markdowns. In case of overstock or out-of-stock items, ship-from-store options allow inventory to be located and shipped quickly and cost-effectively to locations where the items are more demand.

To find out more about how Openbravo Commerce Suite helps improves business agility in fashion-driven industries, visit our dedicated webpage for apparel and footwear retailers .